Is it legal for someone or an attorney to hold another persons mail as proof of residence in a small claim dispute?
As far as the mail is concerned - it is covered by US Statute and it is illegal for anyone to take anyone's mail out of the mailbox for any purpose. In fact it is even illegal to place anything into a mailbox that was not delivered by the US Mail - the Post Offcie can and many times demanded that postage be paid on those items.
What do you mean by "hold" their mail? Either you live somewhere or you don't.